The Larry Summers Rally Is Already Evaporating

After news broke Sunday afternoon that former Treasury Secretary Larry Summers was withdrawing his name for consideration as the next chairman of the Federal Reserve, stocks and bonds got a nice boost when futures markets re-opened for the week in the evening.

Many consider Summers – who was the frontrunner for the position – to be a more "hawkish" candidate than Fed vice chair Janet Yellen, implying that his appointment to the post would be less market-friendly, because perhaps he would be quicker to withdraw Fed stimulus than a "dovish" candidate like Yellen.

In the past few hours, however, stock and bond markets have taken a sharp turn lower, and the "Larry Summers" rally that began Sunday evening is already evaporating.

Right now, S&P 500 futures are up only 0.5%, trading around 1690, after hitting a high of 1703.75 (up 1.3%) last night.

The yield on the 10-year U.S. Treasury note, meanwhile, has risen 9 basis points from its low of 2.78% this morning to current levels at 2.87% as futures continue heading lower.

The chart below shows S&P 500 futures.

Thinkorswim

The next chart shows 10-year Treasury futures, which follow a similar pattern.